If your creditors have been on your neck and it’s been giving you a hard time, then filing for bankruptcy could be the only way out. Not that it’s the best tactic to get you off the hook, but you still need to preserve your sanity and your peace of mind. You just don’t want a single thought taking over the better part of your thoughts and concentration. 

There are a plethora of reasons why people file for bankruptcy. You could be going through a financial crisis as a result of a foreclosure, divorce, choking credit cards, or loss of high paying contracts. Whatever your reasons, there are things that you need to take into account before making that final decision of filing for bankruptcy. Below are five key things to consider before filing for bankruptcy. 

1. Hiring an Attorney

Before filing for bankruptcy, it will be a wise decision to enlist the help of a qualified bankruptcy attorney. One thing to note is that bankruptcy law is broad and complicated. You’ll need a qualified attorney to help you in making all the right decisions. They’ll also help to explain the intricate legal processes that you might encounter. Tristan Brown from the TL Brown Law Firm says that should bankruptcy be the only solution, a dedicated bankruptcy attorney will take you through most of the legal processes and help you in resolving your creditor issues. Among the top benefits of hiring a bankruptcy attorney for your case include:

  • It saves you from making costly mistakes – When filing for bankruptcy, you don’t want to go it alone because, for starters, it’s not worth the risk. A single mistake could end up costing you more than you had bargained for. Bankruptcy attorneys are experienced in this field and they’ll help you make informed decisions. 
  • It makes the bankruptcy process a whole lot easier – When filing for bankruptcy, you’ll want the whole process simplified and to end as quickly as possible. And what better way than to hire a qualified bankruptcy attorney?
  • It protects you from bitter creditors – With a bankruptcy attorney by your side, creditors are less likely to harass you. 

2. The Cost of Filing for Bankruptcy

If you thought that filing for bankruptcy was cheap, well, think again. But before you get spooked, it will all depend on the attorney you hire for the job. There are bankruptcy attorneys who will charge exorbitant fees for their services. When looking for a bankruptcy attorney, the first thing you’ll have to consider will be their charges. 

Most law firms will not charge for the initial consultation, which is good. However, ensure that there are no hidden charges before signing on the dotted line. One more thing, if you had added more debts or were behind with a lot of debt repayments, this could end up costing you more when filing for bankruptcy. In layman’s terms, the cost of filing for bankruptcy will also be dependent on how much you owe. 

3. Your Credit History

If you’ve decided to file for bankruptcy, it’s critically important that you consider your credit history. Did you know that filing for bankruptcy will show up on your credit history for years to come? Actually, a bankruptcy record stays on your credit history for ten years. While this might seem scary initially, an older bankruptcy record will not hurt your borrowing tacts. But then again, you still have to consider how filing for bankruptcy will impact your borrowing in the initial years. There will of course be private lending institutions that might consider lending to you, but it will require a lot of research and brainstorming. Additionally, private lending institutions might charge you an extra dime on interest rates. 

4. Time

For those who might have thought that bankruptcy is a quick fix, you could be shocked to note that it might take you longer than you could have imagined. To get you started, there are two main types of bankruptcy; chapter 7 bankruptcy and chapter 13 bankruptcy. It’s for this reason that you’ll need an attorney to help you weigh your options. Let’s take a look at how long each bankruptcy option might take:

 

  • Chapter 7 bankruptcy – For those with little to no assets, filing for Chapter 7 bankruptcy could work in your favor. This is a type of bankruptcy that involves liquidating your assets when settling your debts. Filing for Chapter 7 bankruptcy may allow you to get rid of your unsecured debts. Another benefit of filing for Chapter 7 bankruptcy is that it takes less time compared to other options. Take your time to talk to your attorney and they’ll help to provide you with the best solutions. 

 

  • Chapter 13 bankruptcy – For those who are behind on payments such as mortgage, car, or any other debt repayments, you could consider the Chapter 13 bankruptcy option as it allows you to retain your assets. If you have a regular income and for some reason/s failed to make your monthly house payments, filing for Chapter 13 bankruptcy could allow you more time to catch up on missed payments. 

5. Do You Qualify to File for Bankruptcy? 

If you had previously filed for bankruptcy, this could greatly affect your options. Most states require that you stay for a period of up to 8 years before filing for another bankruptcy. Additionally, you also need to be under a considerable amount of debt and one that you are unable to repay. Bankruptcy should not be applied as a ticket to swindle creditors. Rather, as a means to redeem time and pay your creditors at a later date. Before filing for bankruptcy, you need to be armed with all your financial records, tax returns, and proof of income. 

Before filing for bankruptcy, you also need to consider attending a credit counseling session. It’s most likely that you are going through a tough financial situation and one that is causing you a lot of stress. Also, ensure to align yourself with people who’ll help you get back on track mentally and financially. While it’s not logically possible to wipe out all your debts at one go, filing for bankruptcy will keep your creditors at bay while you seek for other repayment solutions.